~( , ", • ,I. -' ~. <-J u.s. "'" .•' sec news::'A ... ,"" c"""" I est Issue 90-120 June 21, 1990 ···········Inlx,B~ •.··.·.m.·· .•.,~~;.i.·•••iiT~Baj•••••••••••••••••••..•, .: INTERPRETATIONS OF NEW SECURITIES ACT RULES PUBLISHED The Division of Corporation Finance has announced the publication of staff correspondence interpreting Rule 144A, amendments to Rule 144(d) and Regulation S. Copies of the correspondence may be obtained through the Commission's Public Reference Room. Availability Letter Date Subject British Aerospace May 9, 1990 Application of Rule Public Limited Company 144A information requirement to debt securities guaranteed by obligor's parent. Rule 144A May 30, 1990 Application of Rule 144A information requirement to government agency or instrumentality securities guaranteed by sovereign. Jesse M. Brill June 8, 1990 Calculation of holding period under amended Rule 144. The First Boston June 14, 1990 Identification of the Corporation Stock Exchange Automated Quotation (SEAQ) International as "designated organized foreign securities market" under Regulation S. CIVIL PROCEEDINGS FRANK E. SNELL PERMANENTLY ENJOINED The Fort Worth Regional Office announced that, on June 1, a Final Judgment of Permanent Injunction was entered against Frank E. Snell (Snell), who was charged with five other defendants in a Commission injunctive action filed August 7, 1989 in the U.S. District Court for the Northern District of Texas. Snell consented to the entry of the judgment without admitting or denying the Commission's allegations. The judgment enjoins Snell from further violations of the antifraud, proxy, reporting and books and records provisions of the federal securities laws. The Commission's complaint charged AMX, a Dallas-based reporting company; Snell, chief executive officer; William B. Clark, president; Benjamin F. Meador, secretary; Charles E. Washburn, a certified public accountant; and Peter G. Lund, a former broker-dealer, with engaging in a "penny stock" scheme involving the stock of AMX. Default judgments have been entered against AMX and Meador. Washburn, Clark and Lund have consented to permanent injunctions without admitting or denying the Commission's allegations. [SEC v. AMX International, Inc., et al., Civil Action No. CA 3-89-2006- H, ND TX] (LR-125l6) ADVANCED MONITORING SYSTEMS, INC. ORDERED TO FILE REPORTS The Commission announced that, on June 20, the U.S. District Court for the District of Columbia entered a Final Judgment of Permanent Injunction (Judgment), by consent, against Advanced Monitoring Systems, Inc. (AMSI) of 1013 West Eight Street, Amarillo, Texas 79105. The Judgment requires AMSI to file within 60 days its Annual Report on Form 10-K for its fiscal year ended September 30, 1989, and its Quarterly Reports on Form 10-Q for its fiscal quarters ended December 31, 1989, and March 31, 1990. and permanently enjoins it from failing to file timely and complete Annual and Quarterly Reports and Notifications of Late Filing in the future. In its Consent, AMSI admitted that it had failed to file those delinquent reports, and that it failed to file on a timely basis three Annual Reports on Form lO-K, fifteen Quarterly Reports on Form 10-Q, and seventeen Notifications of Late Filing on Form l2b-25. According to its most recent Annual Report. AMSI designs, develops and fabricates pipeline monitoring and inspection devices called microprobes and provides inspection services to pipeline owners. [SEC v. Advanced Monitoring Systems. Inc .• Civil Action No. 90-1458. D.D.C., June 20] (LR-125l7) IRO WITH ASSET FREEZE ORDERED AGAINST TRANSWESTERN OIL & GAS, INC .• OTHERS The Houston Branch Office announced that on June 13, 1990, the Honorable Norman Black. U. S. District Judge for the Southern District of Texas, issued a temporary restraining order (TRO) against Transwestern Oil & Gas Co., Inc. (Transwestern) John N. Ehrman (Ehrman), and Gideon Chern (Chern) as defendants, and against Girelly Capital 2 NEWS DIGEST, June 21, 1990 Corporation (Girelly) as nominal defendant. The Court's TRO enJo~ns Transwestern and Ehrman, of Houston, Texas, and Chern, of New York City, from engaging in further violations of the registration and securities fraud provisions of the federal securities laws and freezes their assets and those of Girelly. A hearing on the Commission's request for preliminary injunction and other equitable relief has been set for June 22, 1990. The Complaint alleges that beginning in April 1988 to the present, Transwestern, Ehrman and Chern have been engaged in an ongoing fraud through the sale of unregistered securities in the form of oil and gas interests. The Complaint also alleges, among other things, that the defendants have not used investors proceeds to drill the number of wells promised to investors. The Commission is also seeking preliminary and permanent injunctive relief as to Transwestern, Ehrman, Chern and Ehrman Investment Group, Inc., as well as an accounting and disgorgement. [SEC v. Transwestern Oil & Gas, Inc., et al., Civil Action No. H-90-1875, USDC SD Tex.] (LR- 12518, June 20) :-":-:>::"::":"'::""::"':::-:---:--_:-::---'-,:::,::::-. INVESTMENT· COMPANY ACT·RELEASES CMC REAL ESTATE CORPORATION A notice has been issued g~v~ng interested persons until July 13, 1990 to request a hearing on an application by CMC Real Estate Corporation for an order under Section 8(f) declaring that it has ceased to be an investment company. (Rel. IC-17537, June 18) THE ONE GERMANY FUND A notice has been issued g~v~ng interested persons until July 16, 1990, to request a hearing on an application filed by The One Germany Fund, Inc. (Fund), a closed-end non-diversified investment company registered under the Investment Company Act of 1940 (1940 Act), for an order of the Commission pursuant to Section 6(c) of the 1940 Act exempting the Fund from the prohibitions of Section 12(d)(3) of the 1940 Act to the extent necessary to allow the Fund to acquire securities of foreign issuers engaged in securities-related activities in accordance with the condition of proposed amendments to Rule 12d3-l urider the 1940 Act. (ReI. IC-17538, June 19) MUTUAL FUND GROUP A notice has been issued g~v~ng interested persons until July 16, 1990, to request a hearing on an application filed by Mutual Fund Group (Trust), Vista Broker-Dealer Services, Inc., Chase Manhattan Bank, N.A., and Chase Lincoln First Bank, N.A. for a conditional order under Section 6(c) of the Investment Company Act of 1940 that would grant an exemption from the provisions of Sections l8(f)(1), 18(g), and 18(i). Applicants seek relief to permit the Trust to issue two classes of shares representing interests in the same investment portfolio, which classes would be identical in all respects except for differences related to Rule 12b-1 distribution expenses, shareholder service expenses, voting rights, and dividend payments. (ReI. IC-17539, June 19) NEWS DIGEST, June 21, 1990 3 FIRST INVESTORS LIFE INSURANCE COMPANY A notice has been issued giving interested persons until July 16, 1990 to request a hearing on an application filed by First Investors Life Insurance Company, First Investors Life Variable Annuity Fund C (Separate Account C), First Investors Corporation, and First Investors Management Company, Inc., for an order pursuant to Section 6(c) of the Investment Company Act of 1940 (Act) granting exemptions from the provisions of Sections 26(a)(2) and 27(c)(2) of the Act to the extent necessary to permit the deduction of mortality and expense risk charges from the assets of Separate Account C pursuant to certain deferred and immediate annuity contracts. (Release No. IC-17S40, June 19) WHITEHALL LINKED LIFE SERIES FUND CO. A notice has been issued giving interested persons until July 16, 1990 to request a hearing on an application filed by Whitehall Linked Life Series Fund Co. (Applicant) for an order under Section 8(f) of the Investment Company Act of 1940 declaring that the Applicant has ceased to be an investment company. (ReI. IC-1754l, June 19) CHALLENGER INCOME SHARES A notice has been issued g~v~ng interested persons until July 18, 1990, to request a hearing on an application filed by Challenger Income Shares, Inc. for an order of the Commission, pursuant to Section 8(f) of the 1940 Act, declaring that it has ceased to be an investment company. (ReI. IC-I7542, June 19) BRADFORD LINKED LIFE VARIABLE ACCOUNT A notice has been issued giving interested persons until July 16, 1990 to request a hearing on an application file by Bradford Linked Life Variable Account (Applicant) for an order under Section 8(f) of the Investment Company Act of 1940 declaring that the Applicant has ceased to be an investment company. (ReI. IC-17543, June 19) BRADFORD VARIABLE ACCOUNT I A notice has been issued g~v~ng interested persons until July 16, 1990 to request a hearing on an application filed by Bradford Linked Variable Account I (Applicant) for an order under Section BCf) of the Investment Company Act of 1940 declaring that the Applicant has ceased to be an investment company. (ReI. IC-17544, June 19) KIDDER, PEABODY & COMPANY Kidder, Peabody & Company, Inc. (Kidder) has been granted a permanent order under Section 9(c) of the Investment Company Act of 1940 exempting Kidder and any affiliated person of Kidder from the provisions of Section 9(a) of the Act to the extent necessary to permit Kidder or an affiliated person of Kidder to employ Mr. Stanley S. Trotman, Jr., an individual who is subject to a securities-related injunction. ReI. IC-17545, June 20) 4 NEWS DIGEST, June 21, 1990 THE EQUITABLE FUNDS An order has been issued on an application filed by The Equitable Funds, et al., pursuant to Section 6(c) of the Investment Company Act of 1940, exempting applicants from Sections l8(f), l8(g), and l8(i) of the Act.